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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Keeping Things Straight On the Tax Deal

Now that the president has cut a deal with congressional Republican leaders on the extension of Bush tax cuts and related matters, it will be helpful for progressives to keep some perspective on how they react.
The objection heard most often before and once the deal was struck was mainly about tactics and psychology: why wasn’t the White House willing to hang tougher in negotiations, creating the credible threat of all the Bush tax cuts expiring? Was the president letting Republicans bully him? Will he ever learn? etc., etc.
There’s actually been less focus on the deal itself than about its existence and timing. There are not actually that many Democratic politicians who would have been happy (or would have admitted to being happy) about the total expiration of the tax cuts, which without any doubt would have been unpopular, and would have been indelibly identified with any future downturn in the economy. “Deficit hawks” are the only cheerleaders for a general increase in tax rates at the moment, and they’re not the ones angry at the president today.
What the deal did achieve is probably the maximum degree of short-term economic stimulus available in the current political environment, thanks to the inclusion of one of the very few stimulus measures popular on both the left and right, a payroll tax “holiday.”
As for the principle of the high-end Bush tax cuts being vindicated by this deal, it’s worth noting that Obama was able to maintain some of the increases in refundable tax credits (the EITC and the Child Tax Credit) that were in the 2009 stimulus legislation. Refundable tax credits have rapidly become a major demon-figure in conservative ideology of late, so it’s significant these items stayed in.
The total costs and benefits of this deal actually can’t be measured until we see if it cleared the way for action during the lame-duck session on DADT and Start, and also assess its impact on the economy.
But if a deal had to be struck–and I understand some progressives thought any deal was too high a price to pay–then I’m with Ezra Klein, this one doesn’t look that bad.

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